Correlation Between Desjardins and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Desjardins and Dow Jones at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Desjardins and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins RI USA and Dow Jones Industrial, you can compare the effects of market volatilities on Desjardins and Dow Jones and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Desjardins with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins and Dow Jones.
Diversification Opportunities for Desjardins and Dow Jones
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Desjardins and Dow is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins RI USA and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Desjardins is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Desjardins RI USA are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Desjardins i.e., Desjardins and Dow Jones go up and down completely randomly.
Pair Corralation between Desjardins and Dow Jones
Assuming the 90 days trading horizon Desjardins RI USA is expected to generate 1.03 times more return on investment than Dow Jones. However, Desjardins is 1.03 times more volatile than Dow Jones Industrial. It trades about 0.13 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 2,833 in Desjardins RI USA on August 26, 2024 and sell it today you would earn a total of 1,624 from holding Desjardins RI USA or generate 57.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Desjardins RI USA vs. Dow Jones Industrial
Performance |
| Timeline |
Desjardins and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Desjardins RI USA
Pair trading matchups for Desjardins
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Desjardins and Dow Jones
The main advantage of trading using opposite Desjardins and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins position performs unexpectedly, Dow Jones can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dow Jones will offset losses from the drop in Dow Jones' long position.| Desjardins vs. Desjardins RI Canada | Desjardins vs. Global X Global | Desjardins vs. Desjardins RI Global | Desjardins vs. Desjardins Canadian Preferred |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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